The 4th Circuit recently reversed a South Carolina district court order in The Sustainability Institute v. Trump, ruling that claims over suspended and terminated federal grants belong in the Court of Federal Claims rather than district court, and finding plaintiffs failed to identify a statute that specifically prohibits the government from freezing or ending those grants.
The case centers on environmental and agricultural grants awarded to nonprofits and local governments that the federal government later suspended or terminated. Those recipients sued, claiming violations of the Administrative Procedure Act, certain appropriations statutes, and constitutional protections. A district court granted substantial relief to the plaintiffs, but the administration appealed to the 4th Circuit, which issued a different view. The appellate panel vacated the district court’s order and sent the case back for further proceedings consistent with its opinion.
The court’s reasoning leans heavily on recent Supreme Court authority treating some APA claims as essentially contractual, pointing to prior decisions that place suits over promised payments and grant terms within the jurisdiction of the Court of Federal Claims. The panel emphasized that the plaintiffs’ injuries and rights to payment stemmed from the government’s refusal to pay according to the grant agreements, making their claims contractual in nature. Because the district court lacked jurisdiction to hear contract-based claims that belong in the Court of Federal Claims, the injunctions it issued could not stand.
The three-judge panel included appointees from different administrations, and their joint opinion focused on legal doctrine rather than politics. The court cited the Supreme Court’s approach in treating grant disputes as contractual when the relief sought is continued payment under the grant’s terms. That framework led the panel to conclude the district court erred by granting a permanent injunction on APA grounds and a preliminary injunction on ultra vires and nonstatutory review claims.
Beyond jurisdiction, the 4th Circuit also addressed the plaintiffs’ appropriations and constitutional arguments, finding them inadequate to show the government acted entirely outside its delegated powers. The opinion stressed that plaintiffs failed to point to a statute that specifically prohibited the government from freezing or terminating their grants. Without such a specific prohibition, the court held the government’s actions did not meet the ultra vires standard required to sustain the district court’s remedy.
The upshot is that the alleged statutory and constitutional violations do not alter the essentially contractual nature of Plaintiffs’ APA claims before us on appeal. “The core of [P]laintiffs’ suit alleges that the Government unlawfully terminated their grants.” Id. at 2665 (Kavanaugh, J., concurring in part and dissenting in part). And Plaintiffs identify no source of law, besides their grant agreements, guaranteeing them the relief they seek: continued payments on those grants. At bottom, Plaintiffs’ “injury and alleged right to payment stem from the government’s refusal to pay promised grants according to the terms and conditions that accompany them.” Id. at 2664 (Gorsuch, J., concurring in part and dissenting in part). Under the Supreme Court’s recent decisions, “the source of the rights upon which the plaintiff[s] base[] [their] claims” is thus contractual. Megapulse, 672 F.2d at 968.
The panel pointed to precedents explaining that lump-sum appropriations give agencies flexibility to adapt to changing circumstances, and that appropriations for programs do not compel specific contracts with particular plaintiffs. That logic undercut the plaintiffs’ attempt to use general appropriations statutes as a basis for a prohibition on the government’s ability to halt grant payments. The court found no statutory command requiring the government to continue funding these particular grant recipients regardless of changing circumstances or policy decisions.
Because plaintiffs could not show a statute specifically prohibiting termination or freezing of their grants, the 4th Circuit held the district court erred in finding the government likely acted ultra vires. The court also concluded the district court’s remedy—directing restoration of access to funding—was improper under the legal standards the panel applied. As a result, the injunctions were vacated and the matter was remanded for further proceedings consistent with the appellate ruling.
The problem, however, is that Plaintiffs have identified no statute “specific[ally] prohibit[ing]” the Government from freezing or terminating the Government from freezing or terminating their grants. Nuclear Regul. Comm’n, 145 S. Ct. at 1776 (internal quotation marks and emphasis omitted). The appropriations statutes cited by Plaintiffs appropriate funds for particular programs and goals. But none of them purport to tell the Government that it must contract specifically with Plaintiffs. Cf. Lincoln v. Vigil, 508 U.S. 182, 192 (1993) (explaining that “the very point of a lump-sum appropriation is to give an agency the capacity to adapt to changing circumstances and meet its statutory responsibilities in what it sees as the most effective or desirable way”). Absent a statute specifically prohibiting the Government from freezing or terminating Plaintiffs’ grants, the district court erred in finding that the Government likely acted ultra vires in freezing or terminating those grants. See Nuclear Regul. Comm’n,145 S. Ct. at 1776. It follows that the court’s awarded remedy—“direct[ing] that Plaintiffs[’] access to funding for [their] grants be immediately restored”—was also error. Sustainability Inst., 784 F. Supp. 3d at 878.
This decision is a clear win for the administration in this particular appeal, although plaintiffs may seek rehearing en banc or pursue other procedural routes. The outcome highlights the growing body of case law steering contract-like grant disputes away from district courts and into specialized forums. Future grant challenges will likely follow the contours laid out here, with jurisdictional and statutory specifics controlling the path of litigation rather than broad claims about appropriations or constitutional violations.
Editor’s Note: Unelected federal judges are hijacking President Trump’s agenda and insulting the will of the people.
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